SYDNEY (Reuters) – Australian wages rose at their slowest pace for the year in the June half, falling short of expectations, while modest gains in the private sector suggested the labor market is slowing.
Figures from the Australian Bureau of Statistics on Tuesday showed the wage price index rose 0.8% in the three months to June, compared with 0.9% in the first quarter and the slowest since the June 2023 quarter. That compared with market forecasts for a 0.9 rise. %. .
Annual wage growth was held at 4.1%, but previous growth has been slightly revised down, meaning there will be a significant decline in the annual rate in the third quarter.
Private sector growth rose 0.7 percent in the quarter, the lowest level last seen in the December quarter of 2021, as the unemployment rate rose due to high interest rates.
“The RBA will be relieved if it sees wage pressures easing,” said Sean Langcake, head of macroeconomic forecasting at Oxford Economics Australia.
“However, with no improvement in output growth, the current pace of wage growth is still too strong for inflation to return to target sooner.”
The Reserve Bank of Australia has held its policy steady since November, judging the current cash rate of 4.35% – up from 0.1% during the crisis – limited enough to bring inflation to 2-3% while maintaining employment gains. .
However, it determines that the labor market is still a little hot, one reason why inflation, which was 3.9% in the last quarter, is expected to return to the target level by the end of 2025.
Some analysts had argued that rates weren't high enough, but the RBA's reluctance to hike is more than a few economists are calling for a rate cut early next year, following other major central banks.
Markets are now betting comfortably on the end of the year, as they recently signaled the risk of another hike.
Overall the annual wage increase was still enough to take it above inflation of 3.6%, which is a welcome return to real wage growth after years of negative results.
Revenue will get a further boost from a major round of tax cuts that began in July.
